The Tax Court, in Kohler, TC Memo 2006-152, permitted a reduction in the value of stock as a result of a corporate restructure when the estate elected to value assets at the date six months after death (called the alternate valuation date). The IRS has attempted to flush away that result by issuing proposed regulations that provide that only changes in market conditions could reduce value for estate tax purposes. Prop. Treas. Reg. Sec. 20.2032-1.
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